Judgment for BatesCarey’s Client on Illinois COVID-19 Business Income Claim
In Haisous, LLC v. State Auto Prop. & Cas. Ins. Co., 2022 WL 999987, BatesCarey attorneys Mickey Passman and Joanna Swartout obtained a ruling that BatesCarey’s insurer client owed no coverage for business income loss allegedly caused by COVID-19 restrictions on the insured’s restaurant operations. The United States District Court for the Northern District of Illinois held that, under Illinois law, COVID-19 restrictions on restaurant operations did not constitute “direct physical loss” of property, as was required to trigger coverage under the commercial property policy issued by BatesCareys’ client.
Haisous operates three restaurants in Chicago. Haisous alleged that it was required, as a result of various state and local coronavirus shutdown orders, to suspend dine-in services at all of its locations. BatesCarey’s client filed a motion for judgment on the pleadings arguing that the business income, extended business income, extra expense, civil authority, business income from dependent properties income and spoilage coverages were triggered only by “direct physical loss of or damage to property,” and that no such “direct physical loss” was alleged or could be alleged.
Relying heavily on case law that BatesCarey’s attorneys submitted to the court, the court accepted BatesCarey’s client’s argument that “direct physical loss” does not include “loss of use” without “physical alteration” of property. The court further found that Haisous did not adequately allege that its property suffered any physical alteration. The court noted that even if Haisous had alleged the presence of the coronavirus, the presence of the virus does not cause physical alteration of property. Accordingly, the court entered judgment on the pleadings for BatesCarey’s client.
This victory marks another of the firm’s precedent-setting wins defending clients against COVID-19 business interruption claims in the wake of the multi-year pandemic and ensuing impact facing the insurance industry at large.